Anti-Kickback and Stark

February 13, 2015

Illinois physician Dr. Michael J. Reinstein pleaded guilty to the crime of receiving illegal kickbacks and benefits totaling nearly $600,000 from pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and its subsidiary IVAX LLC in exchange for regularly prescribing the anti-psychotic drug clozapine to his patients.  Reinstein also agreed to pay $3.79M to settle a parallel civil lawsuit alleging he violated the False Claims Act for causing the submission of false claims to Medicare and Medicaid for the clozapine he prescribed for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities.  In March 2014, Teva Pharmaceuticals and IVAX paid $27.6M million for their role in the kickback scheme. DOJ

February 11, 2015

Delaware-based pharmaceutical manufacturer AstraZeneca LP agreed to pay $7.9M to settle charges it violated the False Claims Act by engaging in an illegal kickback scheme with pharmacy benefit manager Medco Health Solutions.  The government alleged, among other things, that AstraZeneca agreed to provide remuneration to Medco in exchange for Medco maintaining for AstraZeneca’s Nexium drug “sole and exclusive” status on certain Medco formularies and through other marketing activities.  The charges originated with a whistleblower lawsuit filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle under the qui tam provisions of the False Claims Act.  They will collectively receive a whistleblower award of $1,422,000.  Whistleblower Insider

January 9, 2015

Global pharmaceutical company Daiichi Sankyo Inc. agreed to pay $39 million to resolve allegations it violated the False Claims Act by paying kickbacks to induce physicians to prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. According to the government, Daiichi paid physicians improper kickbacks in the form of speaker fees as part of Daiichi’s Physician Organization and Discussion programs which were often just lavish dinners with the speaking physicians’ own medical group or staff. The charges originated with a whistleblower lawsuit filed by former Daiichi sales representative Kathy Fragoules under the whistleblower provisions of the False Claims Act. She will receive a whistleblower award of $6.1 million. DOJ

November 6, 2014

Medical device maker Biotronik Inc. agreed to pay $4.9M to resolve allegations it violated the False Claims Act by paying kickbacks to induce physicians to use its products. Specifically, the government charged that Biotronik induced electrophysiologists and cardiologists practicing in Nevada and Arizona to use Biotronik pacemakers, defibrillators and cardiac resynchronization therapy devices by paying them in the form of repeated meals at expensive restaurants and inflated payments for membership on a physician advisory board. The allegations first arose in a whistleblower lawsuit filed by a former Biotronik employee, Brian Sant, under the qui tam provisions of the False Claims Act. Sant will receive a whistleblower award of $840,000. DOJ

October 29, 2014

Medical device maker EBI LLC, doing business as Biomet Spine and Bone Healing Technologies and Biomet Inc., agreed to pay $6M to resolve allegations it violated the False Claims Act by paying kickbacks to induce use of its bone growth stimulators, which are used to repair fractures that are slow to heal. Specifically, the government alleged that from 2001 to 2008 EBI paid staff at doctors’ offices (through personal service agreements) to influence doctors to order its bone growth stimulators. The allegations originated in a whistleblower lawsuit filed by former EBI product manager Yu Yue under the qui tam provisions of the False Claims Act, who will receive an undisclosed whistleblower award. DOJ

October 21, 2014

Kentucky-based cardiologists Satyabrata Chatterjee and Ashwini Anand, who jointly owned cardiologist physician group Cumberland Clinic, agreed to pay $380,000 to resolve allegations they violated the False Claims Act by entering into sham management agreements with Saint Joseph Hospital in exchange for the referral of cardiology procedures and other healthcare services to Saint Joseph. The government alleged that St. Joseph Hospital entered into sham agreements with Chatterjee and Anand, under which the physicians were paid to provide management services but did not in fact do so and that in exchange Chatterjee and Anand agreed to enter into an exclusive agreement with Saint Joseph to refer Cumberland Clinic patients to the hospital for cardiology and other services in violation of the Stark Law and the Anti-Kickback Statute. The government previously entered into a $16.5M settlement with Saint Joseph for the allegedly sham management contracts for unnecessary and excessive cardiology procedures. The allegations originated from a whistleblower lawsuit filed by three Lexington, Kentucky cardiologists under the qui tam provisions of the False Claims Act. The three whistleblowers, Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina, will collectively receive a whistleblower award of $68,400. DOJ

October 17, 2014

Two groups of Houston-based diagnostic centers agreed to pay more than $2.6M to settle allegations they violated the False Claims Act by engaging in improper financial relationships with referring physicians in violation of the Stark Statute. One group of centers, which operates under the name One Step Diagnostic, agreed to pay $1.2M. The other group of centers, consisting of Complete Imaging Solutions LLC doing business asHouston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC,Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston MRI & Diagnostics LLC agreed to pay about $1.5M. The allegations originated from a whistleblower lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act, who will receive an undisclosed award. DOJ

August 29, 2014

Austin, Texas-based Omni Surgical L.P. (doing business as Spine 360), a manufacturer of devices used in spinal surgery, and Dr. Jamie Gottlieb, an Indiana spinal surgeon, agreed to pay $2.6 million to settle allegations that Spine 360 paid illegal kickbacks to Gottlieb to induce him to use the company’s products in violation of the False Claims Act and Anti-Kickback Statute. According to the government, Spine 360 made payments to an entity controlled by Gottlieb which were purportedly made pursuant to a series of intellectual property agreements but in reality were sham payments to compensate Gottlieb for using Spine 360 products in his surgeries. DOJ

August 7, 2014

Gary Lang, a CEO of an Atlanta-area hospital and Tracey Cota, the co-owner and chief operating officer of the Atlanta-based medical clinic chain Hispanic Medical Management, pleaded guilty for paying illegal kickbacks to clinics in exchange for Medicaid patient referrals. According to the government, Cota conspired with Lang and other executives from Atlanta-area hospitals and from a hospital on Hilton Head Island to pay kickbacks to Hispanic Medical Management for the referral of its patients, primarily undocumented Hispanic women seeking prenatal care services. These referrals ultimately resulted in Medicaid reimbursements of over $100 million to the hospitals. DOJ

July 21, 2014

Alabama-based hospital system Infirmary Health System Inc., along with two affiliated clinics and Diagnostic Physicians Group, agreed to pay $24.5M to resolve government allegations they violated the False Claims Act, the Anti-Kickback Statute and the Stark Law by paying or receiving financial inducements for medical referrals covered by Medicare.Whistleblower Insider